Purchasing a new car is a big investment, and it’s important to make sure you’re getting the best deal possible. One way to do this is to negotiate the price of the car with the dealer (or multiple dealers). Here’s a step-by-step guide to help you negotiate the price of a new car purchase.
Step 1: Research the car you want to buy
Before you start negotiating, it’s important to do your research. Look up the make and model of the car you want to buy and find out the manufacturer’s suggested retail price (MSRP). This is the price that the car is supposed to be sold for, but it’s not always the final price you’ll pay. Also, look for any discounts or incentives that the manufacturer may be offering. This information will give you a starting point for your negotiations.
Step 2: Configure the car you want to buy
This is especially important if you are picky about your car options, such as colors, electronics, upgrades, wheels, and such. Even if you are not picky, configure a car on the manufacturer’s website to get a baseline MSRP for your negotiations. You can then share the configuration code the website gives you with multiple dealerships so they can compete for your business.
Step 3: Know your trade-in value
If you’re planning on trading in your old car, it’s important to know its value. The dealer will most likely offer you less than the car is worth, so it’s important to have a good idea of the trade-in value before you start negotiations. You can find out the trade-in value of your car by using online tools like Kelley Blue Book or Edmunds.
Step 4: Get quotes from multiple dealers
Once you know the MSRP and trade-in value of the car, it’s time to start getting quotes from multiple dealers. It’s important to get quotes from at least three dealers so you can compare the prices. When you get the quotes, make sure to ask if the prices include any discounts or incentives. This will give you a more accurate comparison of the prices. Personally, I send the exact configuration I want to 10 to 15 dealers when I am in the market for a vehicle, make it clear I already test drove the car, and I know exactly what I want, and that I am willing to wait for a matching car configuration if one is not in inventory yet.
Step 5: Negotiate the price
Now that you have multiple quotes and a good idea of the car’s value, it’s time to start negotiating the price. Start by making an offer that’s lower than the MSRP. The dealer will then counter your offer. Keep in mind that the dealer’s initial counteroffer is usually higher than the final price, so be prepared to negotiate. If you’re not happy with the counteroffer, don’t be afraid to walk away. This sends a message to the dealer that you’re serious about getting the best deal possible. Between, in 20113 and 2023, I purchased or helped friends/family purchase. brand new cars and got 6% below MSRP on average. (Subaru, Mercedes, Audi, BMW, Toyota). Do not let dealers trick you into believing you cannot negotiate because of any supply chain issues or the pandemic – all those are simple tactics to make you pay more for the same car(s).
Step 6: Negotiate the trade-in value
If you’re planning on trading in your old car, it’s important to negotiate the trade-in value separately from the price of the new car. The dealer will most likely try to low-ball you on the trade-in value, so it’s important to have a good idea of the car’s value before you start negotiations. If the dealer’s offer is too low, be prepared to walk away. Also, get trade-in offers from other dealers (not the ones that sell the car brand you want) – those offers can help you persuade the dealer you do want to purchase the new car from to give you a better deal.
Step 7: Financing and add-ons
Once you’ve agreed on the price and trade-in value, it’s time to discuss financing and any add-ons. The dealer will most likely try to sell you an extended warranty or other add-ons, but it’s important to remember that these add-ons can add thousands of dollars to the final price of the car. Those add-ons can also be purchased from other dealers after you took possession of your new car (you usually have some time, like 30 or 60 days). Be sure to read the fine print and compare the costs of any add-ons with other providers before deciding.
Step 8: Sign the contract
Once you’ve agreed on the final price, trade-in value, financing, and any add-ons, it’s time to sign the contract. Before you sign, be sure to read the contract carefully and make sure that everything is accurate. If you’re financing the car, make sure that the interest rate and terms are what you agreed to. If you’re leasing the car, make sure that the mileage allowance and other terms are what you agreed to. If in doubt about anything in the paperwork, do not be afraid to ask for legal advice, or advice from a well-informed friend who has experience with the process.
A lot of people dread negotiating pricing on anything. In reality, negotiations are a normal part of any business to consumer interaction, and by skipping negotiations you almost always lose money. The less you negotiate, the harder it is for others to negotiate because dealers figure they can sell people like you are exorbitant prices. If you are financing a large purchase, you likely will pay a lot more (in interest) for that purchase over multiple years. A little research and shopping around can be quite rewarding!
